Read the transcript to the Friday show

ED SCHULTZ, HOST: Good evening, Americans. And welcome to THE ED SHOW from New York.

Breaking news: the White House has just released new contraception guidelines as the Republican war on women rages on. We`ll bring you live coverage of the president`s remarks in Atlanta, Georgia.

It`s a huge night for news. It`s THE ED SHOW -- let`s get to work.

(BEGIN VIDEOTAPE)

GOV. RICK PERRY (R), TEXAS: We don`t think that whether it`s Planned Parenthood or one of their affiliates that they should be getting our dollars to be used in their programs.

SCHULTZ (voice-over): Texas picks a fight with the White House over women`s health. And the White House is fighting back. In :Pennsylvania, the governor keeps on talking, and in Arizona, things are getting ugly.

DEBBIE LESKO (R), ARIZONA STATE REPRESENTATIVE: It will go on to the full Senate and I think this law will be signed by the governor.

SCHULTZ: Tonight, the Obama administration makes a major announcement on contraception. Sandra Fluke is responding. We`ll have the latest.

SCHULTZ: Mitt Romney slips up and tells the truth to Republicans. And Rick Santorum is campaigning against porn. Howard Fineman has the latest on the Republican circus.

And major news out of Wisconsin: Democrats score a major victory. John Nichols of "The Nation" has the latest.

(END VIDEOTAPE)

SCHULTZ: Good to have you with us tonight, folks. Thanks for watching.

In February, President Obama announced a compromise on contraception and women`s health care. Today, the president stood his ground and righties aren`t going to like it. According to the new rule from the Department of Health and Human Services, religious universities will not have to offer contraception directly, but both students and employees of those institutions will be able to get birth control from insurance companies without a co-pay.

HHS is also considering three options to implement the president`s birth control for no co-pay policy with religiously affiliated self-insured employers. Third party administrators would provide contraception in cases where employers act as insurers.

Now, the department wants feedback from the public on those ideas.

The college student, who became the center of the contraception controversy after Rush Limbaugh`s vicious attacks, says she has a few concerns about the new plan but overall Sandra Fluke says she likes what HHS has done.

Meanwhile, states are continuing their efforts to strip women`s rights and roll back services in health care options. In Pennsylvania, for instance, Republican Governor Tom Corbett is getting more heat for his defense of a state-mandated ultrasound for women considering an abortion.

GOV. TOM CORBETT (R), PENNSYLVANIA: It`s a position I took a while ago. It`s just on the outside, it`s not invasive. That`s why.

(END VIDEO CLIP)

SCHULTZ: The bill does not contain the language transvaginal ultrasound. A woman still could be forced into having one if the embryo is too small.

Meanwhile, the Texas Republicans are so hell-bent on defunding Planned Parenthood, they are willing to put thousands of lives at risk. The Texas women`s health program which provides cancer screenings, contraceptions, and basic health care to low income women will lose federal funding because of Governor Rick Perry`s decision to block Planned Parenthood from the state`s Medicaid program.

By excluding family planning providers, Texas broke federal Medicaid rules. As "The Washington Post" reports, the program served about 130,000 women in Texas with the federal government footing 90 percent of the bill.

Governor Rick Perry says the state will pick up the tab for the program. But he is yet to say where he`ll get the money.

Perry went on FOX News to accuse President Obama of playing politics, even though the federal law Perry is fighting was in place during the Bush administration.

(BEGIN VIDEO CLIP)

PERRY: We`re not going to let the program die. We`re going to find the money somewhere. It`s just sad you have an administration more interested in paying off and rewarding their political supporters and using this as a political issue.

(END VIDEO CLIP)

SCHULTZ: Make no mistake -- these Republican lawmakers are playing politics with both women`s bodies. Rush Limbaugh woke up a sleeping giant whether he went after Sandra Fluke and America`s eyes are wide open to what is going on state-by-state. Even Republican lawmakers in Congress are starting to get it.

(BEGIN VIDEO CLIP)

SEN. LISA MURKOWSKI (R), ALASKA: I think that my party is in an unfortunate place right now, as viewed by many, many women in this country, who are feeling very anxious about what they believe to be attacks on women`s health.

(END VIDEO CLIP)

SCHULTZ: Bottom line, politicians who use women as political pawns will lose every time. And the polls are showing it.

Get your cell phones out. I want to know what you tonight. Tonight`s question: do you trust Republicans with women`s health issues? Text A for yes, text B for no to 622639. You can always go to our blog at Ed.MSNBC.com. We`ll have results later on in the show.

I`m joined tonight by MSNBC contributor and Democratic strategist Krystal Ball, and Terry O`Neill, president of the National Organization for Women.

Terry, you first tonight. Clearly, the White House is standing its ground after listening to all the criticism. But this is also the compromise that the Catholic health organizations wanted.

How is this going to play out?

TERRY O`NEILL, PRESIDENT, N.O.W.: Well, this an advance notice of proposed rule making. This is really another small step in a process through which we will eventually learn how all employers -- religiously affiliated employers, non-religiously affiliated employers, churches, and so forth, will comply with the requirement and it`s a very simple requirement, that health insurance companies must cover a list of services, including a list of preventive services. And birth control is simply on that list.

Now, what the White House said today is that they are looking at options for house self-insured religiously affiliated colleges and hospitals and non-profits will comply with the requirement that birth control be included.

SCHULTZ: But this -- since the religious organizations free, they have no responsibility whatsoever, but they can`t be denied from a third party. I mean, how could this be impeding on religious freedom?

O`NEILL: You know, it`s really fascinating. What the White House has said is that -- is that the religious organizations should not be forced to pay for birth control, if they think birth control is against their religious principles. But at the same time, says the White House, women who do not believe that birth control is against their religious principals must have access to birth control on the same basis as all other women.

SCHULTZ: Yes.

O`NEILL: So what the White House is saying is: to the religious organizations, OK, you don`t have to pay, but the women have access to it.

The religious organizations are therefore in a really tight spot, because what they actually want and what they are demanding is that the government step over the line of establishing a religion in violation of the First Amendment, and force a law that says a woman can be deprived of birth control.

And the religious institutions keep claiming their own religious liberty. The White House is giving them that.

SCHULTZ: Sure they are. Sure they are.

O`NEILL: Yes.

SCHULTZ: Krystal, where does the battle go from here?

KRYSTAL BALL, MSNBC CONTRIBUTOR: Well, you know, interestingly, I think what this has shown is that the Republicans put their foot in their mouth, drew a line in the sand and the president on the other hand has been reasonable. He offered up an initial rule from HHS. It was received push back, and he was willing to make accommodation.

And so, I think the American people have said, OK, the president is being reasonable. The Republicans are still stuck in this mindset.

And if you remember the Blunt Amendment that they tried to push through, that Senator Murkowski who have the clip from said she voted for and deeply regretted, would have gone so far not just in undermining women`s health but in undermining health care bill altogether and allowing employers broad ability to deny coverage for anything they found objectionable.

SCHULTZ: This has spiraled out of control as far as being a big campaign issue. Democrats are attacking Mitt Romney on women`s health issues.

Here is the latest ad, let`s look at it.

(BEGIN VIDEO CLIP)

NARRATOR: Romney says he wants to get rid of Planned Parenthood, ending federal support for critical health care services like cancer screenings for thousands of women here in Illinois.

NARRATOR: He supports legislation to allow employers to deny women affordable access to health care services like contraception. He supports extreme policies that would take away a woman`s right to choose and ban many forms of birth control including the pill.

And despite Mitt Romney`s attacks on women`s health care, he`s being supported by prominent local politicians. What are they thinking?

(END VIDEO CLIP)

SCHULTZ: The Democrats couldn`t be asking for a better ad right now. What do you think?

BALL: Yes, that`s absolutely right. I mean, this is not a partisan issue. Access to contraception, access to birth control is something that was settled decades ago. And you know what? This goes to the core of women having control of their lives. If you ask economists, a big part of the reason that women have been able t make the gains they can in the workplace because they can plan their families and take control over their lives, and that`s actually where the term "birth control" comes from.

So, this reaches across the spectrum, you`re going to have a lot of Republican women who are very disturbed at this attack on Planned Parenthood, which most of what it does is provide cancer screenings, preventative health care and access to contraception.

SCHULTZ: And, Terry, do you see the Republicans retreating on this at all? We played the sound byte from Murkowski from Alaska. She voted for the Blunt Amendment, went home and got a rash of comment on it and is now saying that if she had a chance to vote over again, it would be different.

Do you think there will be more of that in the Republican Party? I mean, it is a real image issue right now for them.

O`NEILL: It`s -- I don`t know if there will be more of it. Olympia Snowe decided she wouldn`t run for the Senate again in part because of this atmosphere in which Republicans who support birth control really are not being permitted vote their consciences.

So, good for Lisa Murkowski to recognize it.

SCHULTZ: Yes.

O`NEILL: But look at Rick Perry, you look at the governor of Pennsylvania, look at what`s going on in Arizona.

SCHULTZ: Absolutely. These governors are just running an unbelievable radical agenda and women in every state in America need to pay attention. Krystal Ball and Terry O`Neill, thanks for joining us tonight.

President Obama is speaking at this moment. We will join the president when we come back. He is addressing supporters in Atlanta, Georgia.

You`re watching THE ED SHOW on MSNBC. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: When we return here on THE ED SHOW, we`ll bring you the presidents live remarks in Atlanta, Georgia.

Stay tuned. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

We still have a lot to get in tonight. But let`s join President Obama speaking live in Atlanta, Georgia, at a fundraiser.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The fact that first time in history, you don`t have to hide who you love to serve the country you love. We ended "don`t ask, don`t tell".

(CHEERS)

OBAMA: Change is keeping the promise I made in 2008. For the first time in nine years, there are no Americans fighting in Iraq.

(CHEERS)

OBAMA: We decided to refocus on the folks who actually attacked us on 9/11 and thanks to the brave men and women in uniform, al Qaeda is weaker than it`s ever been and Osama bin Laden is not walking this face -- the face of this earth.

(CHEERS)

OBAMA: None of this has been easy. We still have a lot of work to do, because there are a lot of folks who are still hurting out there. A lot of folks still pounding the pavement and looking for work. A lot of people whose homes values have dropped. A lot of people who are still struggling to make the rent.

There are still too many families who can barely pay their bills. Too many young people still living in poverty.

You know, I was reading a statistic the other day -- fewer than half of African Americans believe we`ll reach the dream Dr. King left for us.

So, we`ve still got so much work to do. And I know when we look at what is, it can be heartbreaking and frustrating. But I ran for resident and you joined this cause, because we don`t settle just for what is, we strive for what might be.

We want to help more Americans reach that dream. I ran for president to give every child a chance. Whether he`s born in Atlanta or comes from rural town in the delta. I ran for president not just to get us back to where we were, but to take us forward where we need to be.

(CHEERS)

OBAMA: And I`m telling you Atlanta we are going to get there.

Step-by-step, we are going to get there.

Already over the past two years, our businesses have added almost 4 million new jobs. Manufacturers are creating jobs for the first time since the 1990s. The recovery is accelerating, the economy is getting stronger -- we`re moving on the right track.

What we can`t do is go back to the same politics that got us in this mess in the first place. Of course, that`s exactly what the other folks want to do -- the folks who are running for president.

(CHEERS)

OBAMA: And they make no secret about it. They want to roll back the laws that we put in place, so that now, Wall Street can play by their own rules again. They want to go back to the day when insurance companies could deny you coverage or jack up your premiums any time they want to without reason. They want to spend trillions more on tax breaks for the very wealthiest of individuals.

Even if it means adding to the deficit, even if it means gutting things likes education or our investment in clean energy or making sure Medicare is stable.

Their philosophy is simple. Everybody is just left to fend for themselves, if those in power could make their own rules, then some how it will trickle down to you.

And they`re wrong. They`re wrong. They were wrong when they tried it. And they`re wrong now.

And the United States of America, we are always greater together than we are on our own. We`re always better off whether we keep the basic American promise. And if you work hard, you can do well enough to raise a family, and own a home, and send your kids to college, and put away a little away for retirement. And that`s the choice in this election.

We`ve got different visions being presented.

This is not another political debate. This is the defining issue of our time.

What are we going to do to make sure that middle class families are secure and that we continue to build ladders for people trying to get in the middle class?

We don`t need -- we don`t need an economy built on outsourcing and bad debt and phony financial profits. We need an economy that`s built to last -- an economy that`s built on American manufacturing, American energy and giving skills to American workers, and holding up those values that we cherish -- hard work, fair play, shared responsibility.

You know, when we think about the next generation of manufacturing, I don`t want to take a route in Asia. I want it to take a route in Atlanta.

(CHEERS)

OBAMA: I don`t want this nation to be known for buying and consuming things from other countries. I want to build and sell to other countries products made in the United States of America. I want to stop rewarding businesses that are shipping jobs overseas. I want to reward companies like this one that are creating jobs right here in the United States of America.

(CHEERS)

OBAMA: I want to make sure that our schools are the envy of the world.

And that means investing in the men and women who stand in front of the classroom -- you know, a good teacher increases the income of a classroom by over $2,500. A great teacher can help a child move beyond their immediate circumstances and reach out for their dreams.

I don`t want Washington to defend the status quo. But I don`t want them to be just bashing teachers. I want to give schools the resources they need to keep good teachers on the job and reward the best teachers, grant schools flexibility to teach with creativity and passion, stop teaching to the test, replace teachers that aren`t helping kids learn.

I want us to create in this country the kind of passion and reverence for education. That is not just by the way a job of government but a job of each of us as parents, as community leaders. And when kids do graduate, I want them to be able to afford to go to college.

We`ve got more tuition debt than credit card debt today. And, by the way, right now, interest rates are scheduled to go up on student loans in July if Congress does not act, so you guys need to get on congress about that. And I`ve said to college and universities, you`ve got to stop tuition from just going up and up and up. Higher education cannot be a luxury, it is an economic imperative that every family should be able to afford.

I want an economy that`s supporting the scientist and researchers that will make sure we discover the next breakthrough in biotechnology, in clean energy. You know, we have subsidized oil companies for 100 years. Give them $4 billion worth of tax breaks when they are making near record profits.

It is time to stop giving tax giveaways to an industry that`s never been more profitable and start investing in clean energy that can create jobs here in the United States and solar power and wind power, biofuels.

We need to give our businesses the best infrastructure in the world -- newer roads and airports and faster railroads and Internet access. You take half the money we have been spending on the wars in Iraq, as we phase down the war in Afghanistan, let`s pay down half -- use half of it to pay down our debt, let`s us the other half to do some nation-building here at home. Let`s put people to work -- rebuilding schools, rebuilding our bridges, rebuilding our ports.

And to pay for this, we`ve got to have a tax system that is fair. I was with Warren Buffett a couple days ago. He says thanks for naming a rule after me.

It`s a very simple principle, the Buffett rule. It says: if you make more than a million dollars a year, you should not pay a lower tax rate than your secretary.

We`ve said if you make less than $250,000 a year, which is 98 percent of Americans -- your taxes shouldn`t go up.

But folks like me, we can afford to do a little more. Tyler can afford to do a little more. Tyler -- he knows -- he knows that.

(LAUGHTER)

OBAMA: You know, when we say that, this is not class warfare. This is not envy. This is just basic math.

Because if Tyler or I or others get tax breaks we don`t need, weren`t asking for the country can`t afford, then one of two things are going to happen. Either the deficit goes up, all these other folks they say they want to do something about the deficit, every single one of their plans actually increases the deficit.

Or alternatively, they got to make up for it by taking it away from somebody who really needs it -- the student who suddenly sees their interest on their loans going up. The senior who suddenly has to pay more for Medicare, the veteran who`s not getting help after having protected us, the family that`s trying to get by.

It`s not right. It`s not who we are. I hear a lot of politicians talk about values during election year.

You know what? I`m happy to have a values debate.

(CHEERS)

OBAMA: I`m happy to have a debate about values. I think about the values my mother and grandparents taught me -- hard work, that`s a value. Looking out for one another, that`s a value. I am my brother`s keeper, I am my sister`s keeper, that is a value.

You know, each of us is only here because somebody somewhere was looking out for us.

It started in the family, but it wasn`t just the immediate family. There was somebody in church, there was somebody in the neighborhood, there was the coach of the Little League. There was somebody who made an investment in our country`s future.

Our story has never been about what we can do alone, it`s what we can do together. We don`t win the race for new jobs and middle class security and new businesses with the same old: "you are on your own" economics. I`m telling you, it does not work. It did not work in the decade before the Great Depression. It did not work in the decade before I took office. It won`t work now.

This is about who we are as a country. The opportunities we`ve always, always passed on to future generations. When I think about Michelle and me and where we come from --

(CHEERS)

OBAMA: You know -- I know you love Michelle.

(CHEERS)

OBAMA: I know. I love her too.

But I think about sometimes, you know, we`ll be in the White House and we think about my mother-in-law who lives upstairs, was a secretary, Michelle`s dad had multiple sclerosis, and still went to work every day, blue collar job. My mom raising me a single mom.

You know, I think about, you know, what they did for us, and the sacrifices they made, and so then I think, well, the sacrifices that I have to make, given all the blessings I`ve received, they can`t just extend to Malia and Sasha. I`ve got to think about somebody else`s kids. I`ve got to make sure that somebody else gets a student loan who is maybe a single mom going back-to-school just like my mom was able to get a student loan, so to get an education.

I`m thinking we`ve got to make sure that jobs are out there for folks who are willing to work and overcoming barriers. I`m willing to make sacrifices for that. That makes my life better, right?

And most of you understand that. You understand if you invest in a teacher, and then she teaches somebody who is the next Steve Jobs or invents some cure for a major disease, that makes us all better.

SCHULTZ: President Obama speaking to supporters in Atlanta, Georgia tonight, live here on MSNBC.

Krystal Ball is still with me. And up next, we`re joined Karen Finney and Richard Wolffe, to wrap the president`s address.

Also, coming up, Howard Fineman on Mitt Romney`s foot in mouth disease about how he says the economy is getting better.

And big news out of Wisconsin today: one of the Republican senators up for recall resigns, what does this mean for the recall race in the Senate?

John Nichols with me on that. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to The ED SHOW. We just heard President Obama`s speech before supporters in Atlanta, Georgia. He`s wrapping it up now.

I`m joined tonight by MSNBC political analyst Richard Wolffe and MSNBC political and former communications director for the DNC, Karen Finney, and MSNBC contributor Krystal Ball. Great to have all of you with us tonight.

Richard, the president working the room, four stops today. Our Twitter @EdShow is blowing up. They like the idea of a values debate. What about that?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: You know, a lot of people have said the president is in campaign mode, but that really only scratches the surface of what he`s doing here. You`re seeing a president who is doing what the Republican candidates said he could never do. He`s running on his record.

And he`s trying to weave a story about why he`s done what he has done. So the values story, that personal moment that he just told about his mother, about his wife`s parents, that puts some connected tissue in there about the choices he has made and the choices voters have.

Are they going to be voting for a go it alone economy or one where you are making investments and building for the future? And that is what he`s trying to do here with this stump speech and with his fund-raisers.

SCHULTZ: Karen Finney, we are seeing the president again show his emotions on his sleeve. He`s very real when he talks. Whereas you look at Mitt Romney, he`s mechanical. Is this the void for the Republicans right now? What do you think?

KAREN FINNEY, FORMER DNC COMMUNICATIONS DIRECTOR: Absolutely. Look, the president is not -- in talking about his story, and his life, he`s talking about the American story, an American story, a mom who goes back to school to be able to help provide for her family, a kid who is raised in part by his grandparents.

I mean, there are a lot of Americans -- I don`t care what color you are, what gender you, what religion you are -- who can relate to some of these story, to some of these struggles, to the challenge of wanting to get in to college and wanting to do better and wanting to do well by your children.

So sure, he`s talking about his values. On the other hand, Mitt Romney is talking about Cadillacs and tree heights and Nascar team owners and football team owners. I don`t think most of us can relate to that.

SCHULTZ: That is a great point. The president again tonight says look, the wealthy have to pay a little bit more. He`s still on the theme, Krystal, of shared sacrifice. He just doesn`t get off that. And he talks about, you know, if you make a million or 250,000, below that, you are not going to get hit.

BALL: It`s because it`s something that resonates with Americans. I mean, it resonates with American values. His whole speech is centered around a very optimistic message, a can-do message of we won`t accept what is.

And the other thing that struck me about this is this was a speech at a fund-raiser. It was in front of his base. That was who was there. And yet you could play that speech anywhere in America and it`s a message that resonates with Americans across the country.

And that is something that, in contrast to the Republicans, is quite striking, because their message has been so limit and so far to the right, you know, talking about contraception. And now Rick Santorum wants to ban porn, that it just doesn`t connect with most American people.

SCHULTZ: Richard Wolffe, I want to talk about the story that came out today, that the treasure trove -- part of the treasure trove that was found by Seal Team 6 revealed that Osama bin Laden wanted to take out President Obama and General Petraeus.

And the president obviously didn`t know that. He made this call to go after Osama bin Laden not knowing that he was being targeted. The dynamics of all this, does this strengthen his case when it comes to decision making and leadership?

WOLFFE: Anything that reminds the American people of that extraordinary moment, that decision to take out bin Laden -- anything that does that is going to help the resident, because it`s just unchallengeable. There is nothing that the other candidates can do that come close to it.

And it reminds -- it reminds voters that look, this hunt went on for a very long time. President Bush invested a lot personally and in terms of resources. It was President Obama who got it done. And it was a very gutsy decision.

The intelligence around it is fascinating. Al Qaeda was a threat. It has reshaped our strategic thinking about al Qaeda, about Afghanistan. And it has opened up new areas that any president going forward can look at.

So that is a moment of leadership. It`s an incredible story. What you saw in 2004 was President Bush running because -- on an ad where he hugs a kid after a natural disaster. This is a president who can go and say look, I secured the country.

SCHULTZ: Karen Finney, what about the fact that Osama bin Laden was bothered by the fact that President Obama was not using the term "war on terror" anymore. He turned in to "War on al Qaeda."

If I remember the news correctly, the righties in this town on TV were giving the president all kinds of heck about not using the term "war on terror." In reverse, it really got into bin Laden`s head.

FINNEY: Absolutely. I had the exact same reaction when I was listening to that part of the intelligence, that he did come under a lot of fire for changing the terminology. And again, part of him wanting to change the terminology was to say we`re moving forward. We`re -- the mission is shifting, which is the right thing to do.

That is part of this can-do, we`re going to keep going forward, not backward. And I love the fact that Osama bin Laden was just apparently incensed by this.

I want to go back to one quick thing, though, Ed, that you said about the president talking about values. One of the things I think Democrats haven`t always done as well is to frame this conversation about values on our terms.

And I love hearing the president out there saying if you want to talk about values, bring it on. We`re going to talk about our values, one of which being we`re going to go get Osama bin Laden as part of our values and keep this country safe.

SCHULTZ: Another one is income inequality, where we have seen on our Vulture Chart where the top two percent has gone over 30 years and where the middle class and the blue liners have been. No doubt the Democrats are winning that as a moral argument as well.

Krystal Ball, Richard Wolffe, Karen Finney, always great to have you with us. Thanks so much.

(CROSS TALK)

SCHULTZ: Next up, Mitt Romney uses his enormous knowledge of business to figure out that the economy is getting better. And he admits to Sean Hannity, yes, it`s turning around. Howard Fineman joins us on that and more from Wisconsin. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW and" thanks for watching tonight. Figuring out Mitt Romney is not an easy thing to do. Now he says the economy is getting better. Here`s Romney last night.

ROMNEY: Well, it`s hard to know. No one can predict precisely what is going to happen in the economy. But -- but I think it`s likely things will get better. Look, no recession has gone on forever. They get better.

This has just taken much longer to recover from, in part because of the policies of this president.

(END VIDEO CLIP)

SCHULTZ: Romney just does not want to give any credit to President Obama because it would undercut Romney`s entire reason for running for office. Romney has screwed this issue up from the very start.

These three sound bytes are from June of 2011, the month he declared his candidacy.

(BEGIN VIDEO CLIP)

ROMNEY: When he took office, the economy was in recession. And he made it worse. And he made it last longer.

He didn`t create the recession, but he made it worse and longer.

I didn`t say that things are worse. What I said was that the economy hasn`t turned around.

(END VIDEO CLIP)

SCHULTZ: It only got worse when Laura Ingraham, radio talker, actually challenged him in January of this year.

(BEGIN VIDEO CLIP)

ROMNEY: Well, of course it`s getting better. The economy always gets better after a recession. There is always a recovery. The question is has it recovered by virtue of something the president has done or has he delayed the recovery and made it for painful? The latter is, of course, the truth.

LAURA INGRAHAM, RADIO TALK SHOW HOST: But isn`t it a hard argument to make if you`re saying like, OK, he inherited this recession; he took a bunch of steps to try to turn the economy around; and now seeing some more jobs; but vote against him anyway?

Isn`t that a hard argument to make? Is that a stark enough contrast?

ROMNEY: Have you got a better one, Laura? It just happens to be the truth.

(END VIDEO CLIP)

SCHULTZ: Here are the facts: 24 months of private sector job growth. The turn around began with the stimulus package that the Republicans were against. Job loss slowed, then jobs were added for 24 consecutive months.

Let`s turn to Howard Fineman, NBC News political analyst and editorial director of the Huffington Post Media Group. Howard, good do have you with us tonight.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP: Hi, Ed.

SCHULTZ: It seems to me that Mitt Romney is serving up some pretty good sound bytes for the Obama team to put in a commercial. When you have your opponent saying your economic plan is working, that is a pretty good place to be, isn`t it?

FINEMAN: I happened to be meeting today with a very prominent Republican strategist who is just shaking his head about Mitt Romney. He keeps screwing up one aspect or another of the campaign. And this is a big problem for him. In his interview with Fox in which he made that statement, he gave a litany of things that he said had not worked well for the president and so forth, even though the economy was recovering.

One thing he didn`t mention, and I thought it was a significant omission, was the auto industry bailouts. I think, and the economists I`ve talked to think, that in addition to the actual jobs it saved and maybe jobs it created, the fact that they turned around the auto industry had a tremendous psychological effect on the -- on consumers and on the economy in general.

SCHULTZ: No doubt.

FINEMAN: I think when the history of this is written, that very tangible thing is going to be key. And it`s no accident that the president was in Toledo yesterday talking to the United Auto Workers for precisely that reason.

SCHULTZ: Yes, no question. Joe Biden was a real hit with the UAW yesterday. But this really -- what Romney is saying, this undercuts his entire campaign. He is supposed to be the economy guy. He`s supposed to be the fix-it guy. And he`s running around saying, well, you know, things are getting better.

He`s not giving anybody any reason why he should be the choice of Americans. It just seems so fundamentally tough. What do you think?

FINEMAN: Well, first of all, sorry for mixing up Joe Biden and Barack Obama, but I`m sure both of them will take the -- be glad of the confusion -- be glad for the confusion. Yes, it was Joe Biden in Toledo and the president was in Maryland making the same case, in some respects.

I think Mitt Romney`s problem is -- one of his problems is he has run such a negative campaign. It`s been based so much on tearing down all of his opponents, including the president, that he hasn`t thought through a more vivid and convincing argument for himself on the economy.

He hasn`t figured out how to focus on the parts of the economy that have not improved. He hasn`t figured out how to make it personal. He hasn`t figured out how to tell the lives of people who are suffering as a result of this very long and deep recession.

There are weaknesses in the president`s case, on home foreclosures, on some regions of the country, on some industries. But the Romney team is focused so much on scatter gun attacks on everybody else, including the president, that they haven`t made their own case. And because they haven`t, it`s now coming pack to haunt them.

SCHULTZ: Illinois primary is Tuesday, and Romney has been on Fox News or Fox Radio almost every day this week. Plus he`s thrown over three million dollars at Illinois, running very negative ads against Rick Santorum. I had some radio callers tell me about it today. He`s almost running like a Democrat, he`s so negative on Rick Santorum.

How is it going to play out?

FINEMAN: Well, the polls right now are showing Mitt Romney ahead. But Rick Santorum has always kind of overperformed, for the most part, on polls. And Mitt Romney`s continuing to be a sort of heavier than air craft. And the Democrats are attacking Romney hard, so that may have an effect.

I think it is going to be close. I do think that Rick Santorum, if he`s going do make a convincing case that Romney just shouldn`t be the nominee, mathematics aside -- that Rick Santorum has to win one of these big industrial states. He came close but did not win Michigan. He came close in Ohio but did not win Ohio.

Just coming close in Illinois is not going to be good enough. He is going to have to make that case. Otherwise Mitt Romney will once again be able to say that he came out on top in an important industrial state. That is just the state of things right now.

SCHULTZ: No doubt. Howard Fineman, great to have you with us tonight. Thanks so much.

Still to come on THE ED SHOW, John Nichols, has the latest out of Wisconsin. A Republican senator up and -- before the recall resigns. Stay tuned. You`re watching THE ED SHOW.

(COMMERCIAL BREAK)

SCHULTZ: In the Big Finish tonight, the battle to end Scott Walker`s radical control of the Wisconsin State House took an amazing turn today. State Senator Pam Galloway, a Tea Partier, is one of four Republicans facing recall elections this up summer. Today she announced her resignation effective at midnight. She cited family health issues.

The GOP has now lost its Senate majority in Wisconsin. And Galloway`s seat will still face a recall despite her resignation. What a difference a year makes.

When the Senate passed Scott Walker`s union busting bill, Republicans had a dominant 19 to 14 majority. It shrunk to 17-16 after Democrats won two recall elections last August.

Now the Senate is dead-locked at 16, making it very hard for Walker to push through any more radical changes before the next round of recall elections in May and in June.

Let`s turn to John Nichols, Washington correspondent of "The Nation" magazine. How big is this?

JOHN NICHOLS, "THE NATION": This is really big. Let`s understand where we were. As you just said, a year ago, Republicans controlled everything. Now at a point when the governor was saying he was going to do special sessions, and when redistricting could be kicked back by the courts to the legislature, he doesn`t have control of the key legislative chamber.

SCHULTZ: So this means there won`t be any special sessions? He`s not going to be able to get anything done. It will be dead locked.

NICHOLS: Unless he wants to make a deal with the Democrats.

SCHULTZ: OK, so the seat Galloway is vacating, what do the Democrats have? Is this going to be a pick up, do you think?

NICHOLS: I sure do. This is Wausau, up in northern Wisconsin. It`s the hometown of Dave Obey, who used to be the Appropriations Committee chair in Congress. Very solid union town.

And during the Tea Party vote of 2010, it swung Republican. But they already were -- Dems were in good shape to take it back. They`ve got a solid candidate, Donna Seidel. And now the Republicans have lost their premier candidate.

SCHULTZ: So you got a big break in this regard, when it comes to the numbers and the recall election. It`s the biggest recall in the history of politics in America.

You have this John Doe investigation that`s going on, that -- it`s like the noose is just starting to tighten in on Walker. How is this affecting people in Wisconsin? What is it doing to his approval or disapproval rating?

NICHOLS: Look, his approval rating, it just can`t get over 50. It can`t get near 50 in recent polls. So he has a problem there.

This is sort of the wheels coming off the car kind of moment. You look at Republican state senators stepping down, Republicans losing control of the state senate. Those are all the sort of things that add up to a sense of crisis, a sense of loss.

SCHULTZ: And more bad news for Republicans in Wisconsin today; an ethics complaint has been filed by the Wisconsin Judicial Commission against Supreme Court Justice Davis Prosser, who faced a recall and won --

NICHOLS: Faced a regular election and won.

SCHULTZ: OK, regular election and won -- for allegedly choking a colleague.

NICHOLS: Yeah.

SCHULTZ: Now is this the first step to him being taken off the bench? How would this process work?

NICHOLS: It is going to be a bitter battle. But that complaint has been filed. If the Judicial Commission determines this is a big issue, it could lead to his removal. But for that to happen, you really have to have a legislature that would probably impeach him.

SCHULTZ: What does this mean, that he is going to be facing a Judicial Commission for ethics violation?

NICHOLS: The truth of the matter is it`s going -- the Judicial Commission will make a ruling. It will probably then have to be decided on by the court. It`s a messy, long situation. But it highlights a crisis.

The colleague who was choked was Ann Walsh Bradley, a highly respected jurist.

SCHULTZ: Will any of these Republican senators who are up for recall -- will they ask Scott Walker to come in their backyard and help them get them reelected or is he politically toxic?

NICHOLS: I do not think especially -- there`s three key districts that are very Democratic. Bringing Walker in isn`t going to help them at all. In fact, these Republican senators got to go beyond the Walker vote if they are going to survive. I don`t think they can pull it off.

SCHULTZ: The money war being lost by the Democrats. Fair enough?

NICHOLS: Unquestionably. The Republicans will have the money.

SCHULTZ: That is the way it is going to go?

NICHOLS: Yes, it`s going to be money power versus people power. But remember, 30,000 people passed those recall petitions.

SCHULTZ: John Nichols, here in New York tonight, you got to fix your wardrobe now. You got St. Patrick`s Day tomorrow. You got to get some green on.

SCHULTZ: Well -- well, that`s right. I didn`t think you`d say that. Have a great Friday.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.END

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